Gigaclear bags £420m for rural FTTP expansion

It’s not all doom and gloom for UK altnets, as Gigaclear has attracted £420 million of equity investment that enables it to significantly raise its coverage target.

Under its existing rollout plan, Gigaclear aims to reach 500,000 premises by the end of this year. In a statement on Thursday, it revealed that the fresh source of capital will give it the financial clout it needs to connect more than a million premises by 2027.

The money comes from infrastructure-focused fund manager Equitix. Gigaclear didn’t divulge how much of the company Euiqtix has acquired through its investment, but unnamed sources told Bloomberg – which reported on rumours of the investment earlier on Thursday – that Gigaclear’s parent Infracapital will remain its majority shareholder.

“We are delighted Equitix has chosen to invest with us as we continue to expand our network to underserved rural towns and villages that would otherwise be left behind. Equitix recognises, as we do, that focusing on connecting poorly-served rural communities clearly differentiates us from other providers of fibre to the home,” said Gigaclear CEO Gareth Williams.

“There are more than one million additional homes and businesses in the UK for us to build to that fall within our company’s mission. Gigaclear will push forward, ensuring many more communities in rural England are able to benefit from the ultrafast full fibre broadband speeds enjoyed by their urban counterparts,” he said

Gigaclear’s announcement bucks the trend of negativity that has been a feature of the UK altnet scene lately.

Rising prices and interest rates have pressured some of the country’s more debt-laden alternative fibre providers to cut costs this year. One of the largest, CityFibre, raised nearly £5 billion of debt in June 2022 to fully-fund its fibre rollout. However, it reportedly axed 400 staff in February to help it cope with rising costs.

Similarly, Oxford-based altnet Zzoomm raised £100 million of debt in October 2021 to help fund its network deployment. In May, it reportedly culled 300 employees, equal to half of its total workforce.

Altnets were handed another blow last month, when regulator Ofcom gave BT’s networks arm Openreach permission to offer lower-priced, longer-term contracts for its wholesale FTTP products. Altnets were understandably nonplussed, arguing that strengthening the incumbent’s hand will put the squeeze on smaller rivals.

Gigaclear’s announcement this week is a breath of fresh air, relatively speaking, and suggests that there is still plenty reason for altnets to be optimistic.

“We are proud to partner with Infracapital and the Gigaclear team in delivering reliable, affordable, full fibre broadband to rural areas of the UK. In line with our strategic aims to support the UK’s infrastructure and essential services whilst positively impacting local communities, our investment here is a positive step towards generating connectivity for all,” said Equitix CEO Hugh Crossley, in a statement.

“We believe that fast and reliable digital infrastructure, particularly in rural communities, is vital for economic growth. It is a key enabler for people living in often hard to reach areas to get access to all the opportunities and social benefits available, as well as creating jobs,” added Andy Matthews, head of greenfield at Infracapital. “We are delighted with the success that Gigaclear has achieved to date, since our initial investment in 2015, and we look forward to continuing to work with them as they expand across the UK.”

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